Generic Manufacturers Gain Another Advantage in Disputing Drug Patents

FDA sets a precedent for granting generic approvals even when initial
litigation goes against the generic manufacturer


Sanofi-Aventis owns the marketing rights to the colon cancer drug Eloxatin (oxaliplatin injection), which generated worldwide sales of nearly $2 billion in 2008.

However, the Eloxatin franchise started to erode in Europe in 2007 because of the introduction of generic versions of the drug. In the United States, several generic drugmakers, including Teva Pharmaceuticals, stormed the ramparts in February 2007 by filing Abbreviated New Drug Application (ANDA) certifications with the FDA indicating that they would seek to enter the US market prior to the expiration of the patent listed in the Orange Book [1] for Eloxatin.

Sanofi-Aventis responded to the ANDA filings by launching a patent infringement lawsuit against the filers. The Hatch-Waxman Act’s 30-month stay [2], preventing the FDA from approving the generic applications, went into effect and was scheduled to expire in August 2010. However, the statute provides that the stay will be lifted in the event that a court enters a judgment of patent non-infringement. And that the heart of our story.

Sanofi filed its patent infringement complaint in Federal District of New Jersey. On June 18, 2009, that court concluded that the Sanofi patent was not infringed because its claims were limited to the manufacture of Eloxatin by means of a particular process, and the generic drug makers would be using a different process to make the product. That court entered a judgment to that effect on June 30, 2009.

The next day, Sanofi appealed to the Federal Circuit and was granted a temporary stay of the enforcement of the lower court judgment. The generic drug companies were concerned that the wording of the stay was unclear and, on July 16, sought emergency clarification of whether the stay constituted an injunction preventing the FDA from approving the ANDAs. On July 24, the Federal Circuit stated that the stay was clear enough, but did not directly answer the question. It simply directed the parties to go back and read the stay. This lack of clarity at both the trial and appellate level led to further mischief.

The FDA had its own ideas on the subject, ideas that it had published in a March 2000 guidance document. [3] The statutory language that the FDA reviewed at that time was slightly different because it stated that the FDA could approve an ANDA “on the date of the court decision.” The FDA considered the meaning of this term and concluded that the agency would be free to act once “the district court enters its decision,” using words that would be added to the statute in 2003.

The guidance further states: “Neither a stay nor a reversal of a district court decision … will have an effect on the approval of the ANDA …. Should the … patent owner wish to prevent an applicant with an approved ANDA from marketing its product during the course of an appeal, it must obtain an injunction from the court.”

In the Eloxatin case, the FDA was faced for the first time with the problem that its March 2000 guidance document anticipated: A judgment had been entered, but its enforcement had been stayed. The FDA’s position had not changed since 2000. The FDA approved the ANDA on August 7, 2009, notwithstanding the stay.

No judicial relief
Sanofi then commenced a war on two fronts. It filed an emergency motion with the Federal Circuit, seeking to enforce the existing stay against the FDA; and it filed suit in the District of Columbia, seeking injunctive relief that would require the FDA to rescind its approval of the ANDAs.

August 11th was a very bad day for Sanofi. First, the Federal Circuit denied Sanofi’s emergency motion. Then the D.C. District Court affirmed the FDA’s right to approve the ANDAs. [4] Finally, Teva began shipping generic Eloxatin to suppliers of over 2,000 hospitals, clinics and retailers.

Sanofi moved for reconsideration of the Federal Circuit’s denial, but on August 13th a three-judge panel of the court denied that motion. [5] One judge on the panel agreed with this result for technical reasons, but nonetheless characterized as “illogical” and “dubious at best” the FDA’s position that a stay of the underlying proceeding would not prevent it from approving an ANDA.

On August 18th, the D.C. Circuit Court of Appeals upheld the D.C. District Court’s ruling, confirming that the FDA could approve the ANDAs once the lower court judgment had entered, notwithstanding any later stay. That order has not been published, so the court’s reasoning is unknown.

Ironically, on September 10, 2009, the Federal Circuit reversed the New Jersey court’s finding of non-infringement, ruling that the patent claims in question are product claims, not product-by-process claims, and that therefore the process used by the defendants to make the product is irrelevant. [6]

Thus, as the result of an erroneous lower court ruling, reversed in less than 45 days, Sanofi-Aventis lost the benefit of the 30-month stay normally accorded by the Hatch-Waxman Act. The Federal Circuit’s opaque treatment of the request for clarification regarding the effect of its stay of the trial court judgment left the door wide open for the D.C. Circuit Court’s affirmation of the FDA’s March 2000 guidance document. It agreed with the FDA that entry of a judgment of patent invalidity by a district court (however erroneous it might be) is sufficient to permit the FDA to approve an ANDA, even if the 30-month period normally allowed by the Hatch-Waxman Act has not run.

Market erosion
Sanofi-Aventis is now back in court in New Jersey, seeking an injunction against Teva and the other the generic drugmakers, trying to make them stop selling their generic Eloxatin. The injunction process has gotten bogged down, however, and in the meantime the generic makers are gaining market share and beating down the price of Eloxatin. It is doubtful that Sanofi-Aventis will ever regain its former market share and pricing power over Eloxatin.

ANDA litigation is a high-stakes matter, and the risk to pioneer drugmaker is now greater than ever. It is now clear that even an erroneous trial court judgment ruling that the Orange Book patents are invalid will open the floodgates to generic competition. This is a dramatic opportunity for generic makers, who are increasingly willing to risk infringement damages in case they later are found to be infringing; and a new peril to the pioneer manufacturers, for whom vindication on appeal may be too little, too late.

It would not be surprising to see the pharmaceutical industry push for legislative change to overrule this result, and to require that the 30-month stay remain in effect as long as the validity of the patent was being contested, either at the trial court level or on appeal. In the meantime, expect early skirmishes over injunctive relief, even when the Hatch-Waxman 30-month stay would seem to make them unnecessary. The availability of that stay is less secure than it once seemed. PC

REFERENCES
1 The Orange Book is a listing maintained by the FDA at http://www.accessdata.fda.gov/scripts/cder/ob/default.cfm in which innovator drug companies identify the patents that they claim cover the drugs for which they have sought approval to sell. Generic drug review these listings to determine whether, in their view, they will infringe any valid patents in marketing a generic version of the drug.
2 21 U.S.C. § 355(j)(5)(B)(iii).
3 Available at http://www.fda.gov/downloads/Drugs/GuidanceCompliance
RegulatoryInformation/Guidances/ucm072868.pdf
4 The opinion is available at http://206.204.
99.39/media/SanofiDC1.pdf.
5 The court order is available at http://206.
204.99.39/media/FedCirdenial2.PDF.
6 http://206.204.99.39/media/FedCirreversal3.PDF

ABOUT THE AUTHOR
Thomas Carey is the chair of the business practice group of Sunstein Kann Murphy & Timbers LLP, of Boston MA, a law firm specializing in intellectual property matters. Neither the firm nor Mr. Carey has represented any party in the litigation described below.